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Australia's residential construction industry may be showing some green shoots with the news today that approvals for new homes increased 5.5 per cent month-on-month in May, amidst a particularly strong uplift for new houses in WA and NSW.
The latest figures released today by the Australian Bureau of Statistics (ABS) follow a 1.9 per cent rise in April.
In WA the total number of approvals for private sector houses rose by 8.4 per cent to 1,504, which is not far off QLD's 1,841 even though the Sunshine State has double the population size.
QLD still saw a 3.7 per cent in new houses, while NSW recorded a 5.9 per cent uptick to 1,978 dwellings.
However, all these increases were dampened by a 3.4 per cent decline from Australia's leading source of new house approvals, VIC, with 2,845. This resulted in the number of housing approvals nationally increasing by just 2.1 per cent.
"The rise in approvals in May was driven by private sector dwellings excluding houses which rose 16.3 per cent," says ABS head of construction statistics, Daniel Rossi.
When it comes to total dwelling approvals, WA's figures were up by almost 20 per cent, VIC was up by nearly 9 per cent, and QLD was up 6.3 per cent.
"This leaves approvals in the three months to May 2024 down by 1.5 per cent compared to the same period in the previous year," says Housing Industry Association (HIA) chief economist Tim Reardon.
"There were 14,180 residential building approvals in the month of May, with 9,260 detached house approvals and 4,920 multi-units.
"Detached house approvals increased by 1.3 per cent in May 2024 and have been slowly strengthening in recent months."
The HIA highlights that detached approvals in the three months to May 2024 are up by 10 per cent year-on-year, but multi-unit approvals remain 19.1 per cent lower than over the same three months in 2023.
"Multi-unit approvals increased by 14.3 per cent in May from very low levels in recent months," Reardon explains.
"There have been 163,760 total dwelling approvals over the most recent 12 months to May 2024.
"This is well below the 240,000 new homes needed each year from 1 July 2024 to achieve National Cabinet’s goal."
Despite the upward movement, Reardon says the low approval numbers indicate a slow start to building 1.2 million homes over the next five years.
"Increasing the number of homes built will be necessary to address longstanding housing shortages," he says.
"Addressing tax, planning, land and regulatory constraints will be necessary to increasing the supply of homes in Australia."
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